Trump Administration Details $20B Maritime Reinsurance to Get Oil Moving
With the global energy markets in disarray, the Trump administration moved quickly and, late on Friday, March 6, announced more details on its plans for a $20 billion maritime reinsurance program. It came, however, as oil prices skyrocketed, sending gasoline prices in the United States to their highest level in over a year, while forecasts are for continued global shocks.
Donald Trump had announced on Tuesday, March 3, a plan to roll out a reinsurance program as prices of war-risk insurance skyrocketed and tanker movements through the Straits of Hormuz came to a halt. He called on the U.S. Treasury Department and the U.S. International Development Finance Corporation to develop a plan. Today, CEO Ben Black of DFC and U.S. Treasury Secretary Scott Bessent tried to calm fears, reporting an agreement and saying it would “restore confidence in maritime trade and stabilize international markets.”
This came after oil topped $90 a barrel, up from the mid-$60s just a week ago. In some markets, oil has already topped $100 a barrel, and industry leaders such as Qatar predicted it could top $150 a barrel in a matter of days. Despite prices already at their highest level since 2023, Qatar said the continuing escalations in the war could force the Gulf countries to stop energy exports “within days.”
Black and Bessent asserted that with the detailed implementation plan approved by Trump, they were ready to deploy Maritime Reinsurance, including war risk, for the Gulf region. They said it would help to stabilize international commerce. The next steps, they said, would be coordinating with CENTCOM, and details would be announced as they become available.
The announcement said DFC will insure losses up to approximately $20 billion, on a rolling basis, focusing at the start on hull & machinery and cargo. They said it would apply only to vessels that “meet the criteria,” without detailing the terms. DFC said it has identified “best-in-class preferred American insurance partners,” but again did not provide details.
“Working alongside CENTCOM, DFC coverage will offer a level of security no other policy can provide. We are confident that our reinsurance plan will get oil, gasoline, LNG, jet fuel, and fertilizer through the Strait of Hormuz and flowing again to the world,” said Black.
Industry observers, however, have been skeptical that reinsurance alone would stabilize the markets and get the tankers moving. Many note that the primary concern is safety. A handful of tankers are being reported to be “running the gantlet” and risking attack. Agence France-Presse is saying there could have been as few as nine oil tankers transiting the Straits of Hormuz all week.
Industry trade group BIMCO's Chief Safety & Security Officer, Jakob Larsen, had said earlier in the week, “Depending on the details of the proposal, it might help tip the risk/reward ratio and stimulate more shipowners to resume operations in the high-threat area.” He called the further proposal to possibly provide naval security interesting while saying, “Naval escorts would help reduce the threat for the ships being protected.” He, however, noted that it would be difficult to protect all the ships.
U.S. Energy Secretary Chris Wright went on Fox News on Friday, saying the U.S. Navy escorts could begin “as soon as reasonable.” Many, however, point out that the Navy is currently heavily involved in the attacks and ensuring security for U.S. Navy vessels in the region.
For its part, Iran’s Foreign Minister on Thursday, speaking to NBC News, asserted the Straits of Hormuz are not closed. He said it is fear that is causing the tankers to hold back. He said things could change as the war, however, further escalates.
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The Joint Maritime Information Center (JMIC), in consultation with UKMTO & MSCIO, issued an update on the region, emphasizing that the situation remains critical. While noting that Iran had not broadcast a new closure warning for the Straits in 24 hours from Wednesday into Thursday, it warned of the risk of missiles.
“Beyond the kinetic threat, the risk of ‘limpet mine’ or sea-drone attacks remains a significant concern. Limpet-style underwater attacks remain a historical risk pattern dating back to 2019,” writes JMIC. It also introduced a new concern that for a covert/sabotage-style attack, saying that the risk is particularly for stationary or predictably operating vessels in littoral or anchorage areas.
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